WHAT IS INTERNAL CONTROL?


INTERNAL CONTROL



DEFINITION OF INTERNAL CONTROL


Internal control is defined as follows:


“Internal control is an integral process that is affected by an entity’s management and personnel and is designed to address risks and to provide reasonable assurance that in pursuit of the entity’s mission, the following general objectives are being achieved:

·    Executing orderly, ethical, economical, efficient and effective operations;


·     Fulfilling accountability obligations;


·    Complying with applicable laws and regulations;


·    Safeguarding resources against loss, misuse and damage”.



WHAT IS INTERNAL CONTROL?
WHAT IS INTERNAL CONTROL?





The definition highlights the following key issues relating to internal control:


i.   Integral  process  -  internal  control  is  a  series  of  dynamic  of  actions  linked  to  the

organization’s activities.


ii.  Affected by management and personnel – it is the organization’s people who make controls to

work or not to work, hence each must understand his/her roles and responsibilities.




iii. Reasonable assurance – due to uncertainty and factors outside the organization internal control cannot provide absolute assurance regarding the achievement of general objective.

iv. General objectives - internal control aim is to provide assurance on the achievement of 4 types of objectives relating to operations, compliance, reporting, and safeguarding the resources.

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